Japan’s Topix Extends Rally on U.S. Earnings, Europe Bank Tests

Japanese stocks rose, after the Topix index posted its biggest weekly rally in 18 months, amid optimism over U.S. earnings and after the European Central Bank gave most lenders a clean bill of health.

The Topix advanced 0.7 percent to 1,251.13 as of 9:01 a.m. in Tokyo after jumping 5.5 percent last week, the most since April 2013. All but one of the 33 industry groups on the measure climbed today. The Nikkei 225 Stock Average added 0.8 percent to 15,414.89. The Bank of Japan and the Federal Reserve are scheduled to announce policy decisions this week.

The ECB’s study of bank balance sheets found that none of Europe’s largest lenders lacked the ability to withstand times of economic stress.

The Topix index tumbled 7.7 percent through last week from a six-year high in September, pushing short-selling on Tokyo’s bourse this month to the highest level on record. Since 2009, shares have rallied an average 9.7 percent over the three months following surges in bearish bets, according to data compiled by Bloomberg.